The present invention is concerned with increasing the security of transactions involving bearer instruments and is more particularly concerned with the prevention of fraud in such transactions.
In the usual course of commerce, there are occasions when documents which entitle the bearer to receive property or money fall into the wrong hands, either through loss or theft. An individual to whom such a document is presented is confronted with the need to decide whether the bearer is the individual who is entitled to submit, or redeem, that document.
Numerous systems and techniques are available for identifying the bearer of such a document. For example, in the case of a personal check presented by an individual representing himself to be the holder of the checking account, the person to whom the check is issued can insist on being presented with some form of identification bearing a photo. If the individual presenting the check indicates that he does not have such identification with him, the intended recipient must decide whether to accept identification which does not bear a photo. If the check was stolen, along with other forms of identification, then the check may be accepted even though the individual presenting the check is not the individual named in the other forms of identification or on the check.
Similar problems exist, to a greater degree, in the case of traveler's checks. Although persons to whom traveler's checks are presented in payment of a debt can request a photo identification, which is frequently a passport when the traveler's check is used in foreign countries, it is the more common practice to accept the traveler's check if the signature placed thereon at the time the check is used to pay a debt bears a reasonable resemblance to the original signature, which had been placed on the check at the time it was issued. One reason for this practice is that merchants who accept traveler's checks are aware that the issuer of the check will honor it whether it was used by the purchaser or someone who either found or stole the check.
In the case of claim checks, such as baggage claim checks employed during air travel, there is always a concern that a claim check will fall into the wrong hands. Once this happens, if the individual who acquires the check knows the flight which was taken by the individual who originally had the check, it is possible to obtain a piece of luggage belonging to that individual. Even in airports which monitor the baggage claim area, if an individual possesses a claim check matching the tag on the baggage in the individual's possession, their right to that piece of luggage will not be questioned.
In the case of checking accounts, when an individual opens a new account, they are initially given a supply of non-personalized checks for use until checks bearing at least their name, and usually also their address, can be printed and supplied. These initial, or "starter" checks are frequently not accepted by many businesses because they do not bear any printed identification of the account holder.
Even with regard to checks that are personalized, when an individual, and in particular an individual who is not the account holder, cashes a check at the bank in which the account is held and the bank teller determines that the account on which the check is drawn contains sufficient funds to cover the check, it is not uncommon for the teller to pay that check without adequately confirming the identity of the individual presenting the check for payment or the authenticity of the check.